Building sustainable film businesses: the challenges for industry

requested an extra A$30 million (€24 million) in 

funding so that it can raise its A$2.5 million (€2 

million) investment cap in order to back more 

medium-budget films.

Key Conclusions 

Despite the relative generosity of the 40% Producer 

Offset, Australia is still reaching towards a model 

which would foster the more consistent production 

of larger indigenous films and the growth of more 

sustainable companies. The Enterprise Program has 

been a positive move in that direction, and there are 

signs of a beneficial long-term impact.  

12.2 

Brazil

Summary

Country indicators:

OUTPUT 

Production volume 2010  (€m)                   

138

Number of  films                                                  

98

Average budget  (€m)                                     

1.4

Domestic film share, 2011 (%) 

12.4

Country Approach

Brazil has an elaborate and highly regulated 

system of tax incentives, levies and screen quotas 

designed to support the national film industry. 

This is balanced between indirect support, in 

the form of different tax breaks for investment in 

film production, and direct subsidy funded by an 

industry tax. 

The net effect is that producers can raise almost 

their entire production budgets from tax funds and 

subsidies, with only a small investment of their own 

capital, which acts to sustain a constant volume of 

film-making, but does not necessarily guarantee 

either quality or commercial appeal.

In the past this resulted in many films being made 

without thought for their market value, resulting 

in films failing to reach a wide audience, or even 

being commercially released. In recent years the 

state agency, Ancine, has attempted to address this 

issue by shifting its emphasis towards more market-

driven initiatives, such as Funcine equity funds and 

the Audiovisual Sector Fund, as well as providing 

incentives for commercial broadcasters and foreign 

distributors to finance film production. 

National Level Support 

Ancine operates both as the regulatory authority 

for film investment, and as the body responsible 

for supporting and promoting the industry. In this 

latter role it oversees Brazil’s complex system of tax 

incentives for investment in production: any project 

wishing to raise money from investors using the 

various tax schemes, or to apply for public funding, 

must first get prior approval from Ancine.

Section 12.0  

l

  Appendices

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the challenges for industry and government

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Section 12.0  

l

  Appendices

Ancine approves around 350 projects every year  

to raise money from investors, although many of 

these never reach principal photography. Total 

investment in 2011 from tax incentives and subsidy 

funds supervised by Ancine was R$263 million  

(€105 million), comprised of R$169 million (€68 

million) worth of tax incentives, R$84 million (€34 

million) through the Fundo Setorial do Audiovisual, 

R$9.3 million (€3.7 million) through the Prêmio 

Adicional de Renda (PAR), and R$ 0.7 million 

(€280,197) through Programa Ancine de Incentivo  

à Qualidade (PAQ). 

In 2011 Ancine itself provided only €4 million in 

direct automatic subsidy, through the PAR and PAQ 

programmes. The PAR, in place since 2005, rewards 

theatrical performance for Brazilian films released 

by independent distributors, while the PAQ, since 

2006, rewards selection for film festivals. The €3.7 

million disbursed through the PAR in 2011 was split 

between producers, distributors and exhibitors; as 

an example of this in practice, in 2009 the producers 

of 26 films received PAR funds, in sums ranging from 

€110,000 to €6,000. The PAQ pays a flat R$100,000 

(€44,000) to any film selected for a qualifying 

festival, with total payments typically in the region 

of €280,000 a year. Ancine also awards about €1 

million via various co-production funds, for Latin 

America, Argentina, Portugal and Galicia. 

Brazil currently has bilateral co-production 

agreements with Argentina, Germany, Canada, 

Chile, Spain, France, Italy, Portugal and Venezuela, 

and is also a signatory of multilateral treaties, such 

as the Ibero-American Film Integration, and the 

Agreement for the Establishment of the Common 

Market of Latin American Film. It is also a member 

of RECAM, the national support audiovisual entity 

in MERCOSUR; of the Conference of Iberoamerican 

Authorities of Motion Picture (CACI); and of 

IBERMEDIA Fund, which finances co-productions 

from 18 countries and aims to strengthen and 

encourage the distribution of audiovisual products 

in the Iberoamerican countries.

Selective support is available from the Audiovisual 

Sector Fund (FSA), worth €34 million in 2010; this 

is funded by the Condecine, an 11 per cent tax 

applied on remittances abroad of profits from the 

commercial exploitation of audiovisual works. 

Project selection is carried out by a committee 

comprising representatives from Ancine and the 

film industry. The aim of the FSA is to support 

films with good commercial potential, though 

it also supports TV production, distribution and 

exhibition, and may in future be extended to include 

script development, training and co-production. 

In 2010, the FSA invested €13.6 million in feature 

films, €8 million in television and €10 million in film 

distribution rights. 

By far the largest amount of funding for Brazilian 

film production comes from private investment 

supported by a series of tax incentives, laid down in 

Brazil’s Audiovisual Law. This allows any company 

or individual based in Brazil to invest part of its tax 

liability in local film production, while other articles 

allow foreign distributors, or Brazilian broadcasters 

who import foreign programmes, to invest 70 per 

cent of the withholding tax due on payments sent 

abroad. In 2012 the FSA alone will invest €82 million 

in audiovisual projects, largely because of greater 

investment by broadcasters through revisions to  

this law.

Brazil also operates a system of private equity funds, 

called Funcines (National Film Industry Funds), 

which are managed by Brazilian financial institutions 

accredited by the Federal Central Bank. The CVM 

(Brazilian Securities Commission) must approve 

the establishment of all Funcines, whose financial 

strategy and selected projects must be previously 

approved by Ancine. Funcines can be established 

in the areas of production, distribution, exhibition, 

and infrastructure, as well as shareholding 

participation in audiovisual companies, and the 

scheme allows companies taxed under the Real 

Profit regime to allocate up to three per cent of 

Income Tax due as investment. This benefit also 

applies to individual investors, who can allocate up 

to six per cent of Income Tax due as investment. 

The fund’s shareholders benefit from marketing 

and merchandising created for the promotion of 

sponsored projects and may recover the value 

invested, obtaining a return over the amount 

invested. Other advantages are: risk diversification, 

due to the fund’s investment in a diversified 

portfolio of projects; investment transparency; 

accounting facility; and the fund manager’s 

experience in negotiating with film producers.  

There are currently five Funcines with a combined 

€26 million under management.

Regional Support 

Brazil has 19 regional film commissions, of which the 

most important is the Rio Film Commission. The Rio 

Audiovisual Program, launched in late 2009, which 

includes the film commission, operates its own 

Funcine of €8 million.

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the challenges for industry and government

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